US embassy cable - 04HANOI2003

UNCLAS HANOI 002003 
 
SIPDIS 
 
STATE FOR EAP/BCLTV 
STATE ALSO PASS USTR FOR EBRYAN 
USDOC FOR 6500 AND 4431/MAC/AP/OPB/VLC/HPPHO 
 
E.O. 12958: N/A 
TAGS: EFIN, ETRD, EINV, VN, IPROP, ASEAN 
SUBJECT: VIETNAM: US-ASEAN BUSINESS COUNCIL MEETINGS IN 
HANOI 
 
1.  During a visit to Hanoi July 12-13, 26 member firms of 
the US-ASEAN Business Council, accompanied by Ambassador and 
embassy officers, met with key GVN leaders including Prime 
Minister Phan Van Khai, Deputy Prime Minister Vu Khoan, 
Foreign Minister Nguyen Dy Nien, Finance Minister Nguyen 
Sinh Hung, Trade Minister Truong Dinh Tuyen, Minister of 
Planning and Investment Vo Hong Phuc, and Politburo Member 
Phan Dien.   At these meetings, the firms described their 
concerns about doing business in Vietnam.  Outlined below 
are the key issues raised. 
 
-- Insurance licenses:  Noting that this was its highest 
priority, the Council called on the GVN to issue long- 
pending licenses to three US firms, ACE and New York Life 
for life insurance, and American International Group (AIG) 
for non-life. 
 
-- Transparency:  The Council called for Vietnam to continue 
to enhance transparency and rule of law throughout the 
government.  Government procurement should also be fair and 
transparent. 
 
-- IPR and innovation:  The council pointed to the need for 
improved IPR protection in order to foster innovation.  In 
particular, there was concern that satellite television 
broadcasts should only provide licensed content for which 
appropriate royalties have been paid. 
 
-- Customs:  the council noted that Vietnamese Customs 
currently inspects every package that enters or leaves the 
country, even those shipped by express delivery services. 
This practice can double the time required to deliver goods 
to and from Vietnam.  If such inspections continue, Vietnam 
may preclude being selected to participate in the global 
supply chain. 
 
-- Auto Taxes:  The Council noted that with the sharp 
increase in the special consumption tax (SCT) on 
automobiles, auto sales were down and the operations of 
firms assembling cars here were facing serious problems. 
The Ford Motor Company representative noted that full 
implementation of multi-year increases in the SCT "will 
absolutely destroy our business."  Ford executives also 
noted that Vietnam is the only market in the world where the 
firm's sales are "deteriorating." 
 
-- Shipping:  Noting that there were reports that the Port 
of Saigon would be relocating in the future, the council 
called for transparent information be provided to all 
companies engaged in shipping activities, not simply to 
state-owned firms, so that they could make informed 
decisions about increasing their investments. 
 
2. COMMENT:  This US-ASEAN Business Council delegation ranks 
as one of the largest, most senior business groups to travel 
to Vietnam in recent years.  The tone of the visit was 
positive, with delegation members expressing optimism 
regarding commercial opportunities in Vietnam.  In turn, GVN 
officials seemingly grasped the group's message regarding 
the constructive role member firms could play in supporting 
Vietnam on WTO accession and other matters of concern to 
Vietnam. Still, it remains unclear whether the GVN can 
muster the political will to deliver on key industry 
concerns.  On the priority Business Council issues of 
operating licenses for three U.S. insurance firms and relief 
from excessive auto tariffs and taxes, GVN reactions were 
defensive and non-committal, offering little hint of 
progress from the GVN positions presented on these topics 
during the Council's last visit in February of this year. 
End Comment. 
BURGHARDT